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* Banks among worst performers as Ukraine tensions escalate
* FTSEurofirst 300 down 1.6 pct
* ESTOXX 50 falls 2 pct
* Some traders see Ukraine resolution in coming weeks
By Sudip Kar-Gupta
PARIS, March 3 (Reuters) - Escalating tensions in Ukraine hit European equity markets on Monday, with banking stocks among the worst performers due to concerns about some lenders' exposure to the region.
The pan-European FTSEurofirst 300 index, which rose 16 percent last year, fell 1.6 percent to 1,326.94 points in early trading, while the euro zone's blue-chip Euro STOXX 50 index dropped 2 percent to 3,086.95 points.
A fall in banking and financial shares took the most points off the FTSEurofirst 300 index, with the STOXX Europe 600 Banking Index weakening by 2 percent.
Banks exposed to Ukraine and Russia - which are in conflict over the political direction of Ukraine - were among the hardest hit stocks on the FTSEurofirst 300 index, with Austria's Raiffeisen slumping 6.4 percent while France's Societe Generale fell 4.6 percent.
"We're monitoring the developments and we might at some point take some profits and take some risk off the table," said Cyrille Urfer, head of asset allocation at Swiss bank Gonet.
Russian forces have taken control of the Ukrainian region of Crimea, which has an ethnic Russian majority, and Ukraine has ordered a military mobilisation as well as putting its forces on combat alert.
"Investors had underestimated the risks of an escalation in Ukraine, so the events over the weekend are a wake-up call for the market," said David Thebault, head of quantitative sales trading at Global Equities in Paris.
The drop in European shares pushed key stock markets further below multi-year highs approached earlier this year.
The FTSEurofirst 300, which is up by around 1 percent since the start of 2014, is within sight of its highest level since May 2008, while Germany's DAX, which fell 2.5 percent to 9,452.72 points, hit a record high of 9,794.05 points in January.
Andreas Clenow, hedge fund trader and principal at Zurich-based ACIES Asset Management, expected an eventual political resolution of the Ukraine problems within the coming weeks, which he said should help equity markets maintain their upwards trend seen over the last year.
"It's going to be scary for a week or two but from a geopolitical and economic point of view, I expect it will have blown over in a few weeks," said Clenow.